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€2trn AUM drop across European funds in H1 2022

Marking one of the steepest declines in nearly two decades, Refinitiv found

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Pete Carvill

New data from Refinitiv indicates that assets under management across the European fund industry fell from €15.3trn to €13.3trn over the first half of 2022.

According to the firm’s European Fund Market Trends: H1 2022 report, this marks the first time that AUM for European funds has fallen since the middle of 2016 and is one of the steepest declines over a period of time going back almost 20 years.

Refinitiv said that the share of products with an ESG-related investment approach was surprising, with such funds accounting for €5.6trn, or 41.92%, of the industry’s overall assets. Conventional funds, meanwhile, account for €7.8trn, or 58.08%.

The authors wrote: “Looking at these numbers, one needs to bear in mind that fund promoters in Europe have repurposed a high number of conventional funds to ESG-related funds to align their product ranges either with their in-house sustainability strategy and targets or with the market demand, since investors have shifted assets toward ESG-related products since after the introduction of the EU action plan to financing sustainable growth and the respective regulations.”

The report also says that after record inflows for mutual funds in 2020 and 2021, and for ETFs in 2021, the European fund industry has seen net outflows of €185bn so far this year.

The authors wrote: “The high outflows from money market products are somewhat surprising within the current market environment since these products are considered to be so-called safe-haven products. Therefore, this trend might be a hint that European investors want to protect their portfolios from the impact of high inflation rates. The same might be somewhat true for the outflows from bond funds, as bonds which have been issued during the low interest rate environment are not able to compensate investors for the high inflation rates. In addition, bonds are supposed to face losses from the shift in central bank policies around the globe.”

Other figures presented by Refinitiv include that non-SFDR-classified ESG-related products saw the highest inflows in their category at €36.8bn. It also said that the best-selling Lipper global classification for the first half of 2022 was Equity Global (+€41.2bn), followed by Equity Global Income (+€14.3bn) and Bond USD Government (+€13.8bn).

BlackRock (+€15.9bn) was the best-selling fund promoter in Europe for the year 2022 so far, ahead of Vanguard (+€11bn) and Swisscanto (+€7.3bn).

Meanwhile, Switzerland is the fund domicile with the highest inflows for this year so far. Detlef Glow, head of EMEA research at Refinitiv Lipper, said: “Given the current situation in the economies around the globe it was no surprise that the European fund industry faced declining assets under management over the course of the year 2022 so far, as the geopolitical situation in Europe, the still ongoing Covid-19 pandemic, disrupted delivery chains, increasing inflation, and interest rate hikes put some pressure on the securities markets.”